Sample Chapter

The Law of Leadership

It's better to be first than it is to be better.

Many people believe that the basic issue in marketing is convincing
prospects that you have a better product or service.

Not true. If you have a small market share and you have to do battle
with larger, better-financed com-petitors, then your marketing strategy
was probably faulty in the first place. You violated the first law of
marketing.

The basic issue in marketing is creating a category you can be first in.
It's the law of leadership: It's better to be first than it is to be
better. It's much easier to get into the mind first than to try to
convince someone you have a better product than the one that did get
there first.

You can demonstrate the law of leadership by asking yourself two
questions:

1) What's the name of the first person to fly the Atlantic Ocean solo?
Charles Lindbergh, right?

2) What's the name of the second person to fly the Atlantic Ocean solo?
Not so easy to answer, is it?

The second person to fly the Atlantic Ocean solo was Bert Hinkler. Bert
was a better pilot than Charlie-he flew faster, he consumed less fuel.
Yet who has ever heard of Bert Hinkler? (He left home and Mrs. Hinkler
hasn't heard from him since.)

In spite of the evident superiority of the Lindbergh approach, most
companies go the Bert Hinkler route. They wait until a market develops.
Then they jump in with a better product, often with their corporate name
attached. In today's competitive environment, a me-too product with a
line extension name has little hope of becoming a big, profitable brand
(chapter 12: The Law of Line Extension).

The leading brand in any category is almost always the first brand into
the prospect's mind. Hertz in rent-a-cars. IBM in computers. Coca-Cola
in cola.

After World War II, Heineken was the first imported beer to make a name
for itself in America. So four decades later, what is the No. 1 imported
beer? The one that tastes the best? Or Heineken? There are 425 brands of
imported beer sold in America. Surely one of these brands must taste
better than Heineken, but does it really matter? Today, Heineken is
still the No. 1 imported beer, with 30 percent of the market.

The first domestic light beer was Miller Lite. So what is the
largest-selling light beer in America today? The one that tastes the
best? Or the one that got into the mind first?

Not every first is going to become successful, however. Timing is an
issue-your first could be too late. For example, USA Today is the
first national newspaper, but it is unlikely to succeed. It has already
lost $800 million and has never had a profitable year. In a television
era, it may be too late for a national newspaper.

Some firsts are just bad ideas that will never go anywhere. Frosty Paws,
the first ice cream for dogs, is unlikely to make it. The dogs love it,
but the owners are the ones who buy the groceries, and they think that
dogs don't need an ice cream of their own. They should be happy just to
lick the plates.

The law of leadership applies to any product, any brand, any category.
Let's say you didn't know the name of the first college founded in
America. You can always make a good guess by substituting leading
for first. So what's the name of the leading college in
America? Most people would probably say Harvard, which is also the name
of the first college founded in America. (What's the name of the second
college founded in America? The College of William and Mary, which is
only slightly more famous than Bert Hinkler.)

No two products are any similar than twins are. Yet twins often complain
that the first of the two whom a person meets always remains their
favorite, even though the person also gets to know the other one.

People tend to stick with what they've got. If you meet someone a little
better than your wife or husband, it's really not worth making the
switch, what with attorneys' fees and dividing up the house and kids.

The law of leadership also applies to magazines. Which is why
Time leads Newsweek,People leads Us, and
Playboy leads Penthouse. Take TV Guide, for
example. Back in the early fifties the then-powerful Curtis Publishing
Company tried to field a television- listings magazine to compete with
the fledgling TV Guide. Even though TV Guide had only a
minuscule head start, and despite the awesome strength of Curtis, the
Curtis publication never really got off the ground. TV Guide had
preempted the field.

The law of leadership applies equally as well to hard categories like
automobiles and computers as it does to soft categories like colleges
and beer. Jeep was first in four-wheel-drive off-the-road vehicles.
Acura was first in luxury Japanese cars. IBM was first in mainframe
computers. Sun Microsystems was first in workstations. Jeep, Acura, IBM,
and Sun are all leading brands.

The first minivan was introduced by Chrysler. Today Chrysler has 10
percent of the car market and 50 percent of the minivan market. Is the
essence of car marketing making better cars or getting into the market
first?

The first desktop laser printer was introduced by a computer company,
Hewlett-Packard. Today the company has 5 percent of the personal
computer market and 45 percent of the laser printer market.

Gillette was the first safety razor. Tide was the first laundry
detergent. Hayes was the first computer modem. Leaders all.

One reason the first brand tends to maintain its leadership is that the
name often becomes generic. Xerox, the first plain-paper copier, became
the name for all plain-paper copiers. People will stand in front of a
Ricoh or a Sharp or a Kodak machine and say, "How do I make a Xerox
copy?" They will ask for the Kleenex when the box clearly says
Scott. They will offer you a Coke when all they have is Pepsi-Cola.

How many people ask for cellophane tape instead of Scotch tape? Not
many. Most people use brand names when they become generic: Band-Aid,
Fiberglas, Formica, Gore-Tex, Jello, Krazy Glue, Q-tips, Saran Wrap,
Velcro-to name a few. Some people will go to great lengths to turn a
brand name into a generic. "FedEx this package to the Coast."
If you're introducing the first brand in a new category, you should
always try to select a name that can work generically. (Lawyers advise
the opposite, but what do they know about the laws of marketing?)

Not only does the first brand usually become the leader, but also the
sales order of follow-up brands often matches the order of their
introductions. The best example is ibuprofen. Advil was first, Nuprin
was second, Medipren was third. That's exactly the sales order they now
enjoy: Advil has 51 percent of the ibuprofen market, Nuprin has 10
percent, and Medipren has 1 percent.

The fourth brand that entered the market was Motrin IB. Even though it
has the powerful prescription name for ibuprofen, Motrin's market share
is only 15 percent. (Keep in mind that Advil was introduced with a
"Same as the prescription drug Motrin" theme.) And note the
generic substitution. Consumers use Advil as a generic term.
Rarely do they use the word ibuprofen. Even an M.D. will tell a
patient, "Take two Advil and call me in the morning."

Also consider Tylenol, the first brand of acetamin-ophen. Tylenol is so
far ahead of the No. 2 brand that it's hard to determine who is
No. 2.

If the secret of success is getting into the prospect's mind first, what
strategy are most companies committed to? The better-product strategy.
The latest and hottest subject in the business management field is
benchmarking. Touted as the "ultimate competitive strategy,"
benchmarking is the process of comparing and evaluating your company's
products against the best in the industry. It's an essential element in
a process often called "total quality management."

Unfortunately, benchmarking doesn't work. Regardless of reality, people
perceive the first product into the mind as superior. Marketing is a
battle of perceptions, not products.

So what's the name of the first brand of aspirin? The first brand of
acetaminophen? The first brand of ibuprofen? (Hint: Substitute
leading for first and you'll have the answers to these
three questions.)

Charles Schwab bills itself as "America's largest discount
broker." Are you surprised that the Charles Lindbergh of the
discount brokerage business is Charles Schwab?

Neil Armstrong was the first person to walk on the moon. Who was second?

Roger Bannister was the first person to run a four-minute mile. Who was
second?

George Washington was the first president of the United States. Who was
second?